POSCO, LS Electric to build EV parts plants in Mexico

South Korea's POSCO International Co. broke ground on an electric vehicle parts plant in northern Mexico on July 6, while LS Electric Co. signed a tentative agreement to build an EV parts plant in the country.

POSCO International picked Mexico as the site of its EV motor core plant following a US decision to restrict imports of electrical steel, used for EV motor cores. The plant's location is also expected to cut logistics costs for its shipments to the US.

The Mexico plant will supply $460 million worth of motor cores to an as yet unidentified automaker by 2030, according to the company.

The plant will be located in Ramos Arizpe in the state of Coahuila. The city is an auto industry hub housing both car-making plants and components suppliers.  

POSCO International will spend 160 billion won ($123 million) on the construction through 2030. The plant will produce an estimated 1.5 million EV motor core units per year.

A key EV part, a motor core is one of POSCO International’s strategic businesses. The POSCO unit operates two motor core facilities, including a domestic plant with a production volume of 1 million units per year.

The company aims to ramp up its motor core production capacity to 7 million units per year by 2030.

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LS e-Mobility Solutions Co. plans to build an EV parts plant in northwest Mexico to smooth its entry into the North American market, the company said on Thursday.

The unit of LG Electric Co., an industrial energy facility and systems supplier, recently signed a memorandum of understanding with the Mexican state of Durango to set up an EV parts plant there.

It is looking to mass-produce core EV parts such as EV relays and battery disconnect units (BDUs) at the new production lines starting in 2024. The plant will have a floor area of 35,000 square meters.

In return, Durango will provide LS e-Mobility with tax breaks and infrastructure support such as land, tap water and electricity, along with recruitment support and workforce training.

The facility will have an annual capacity of 9 million EV relays and 2 million BDUs by 2030, and is expected to generate 700 billion won ($540 million) in annual sales.

It will become LS e-Mobility’s first overseas plant since it was split off from LS Electric in August, adding to its existing facilities in Cheongju, Korea and Wuxi, China.

An EV relay is installed between the vehicle battery and the inverter to cut off the charge and discharge the battery power. An EV relay is part of a BDU.

The two companies’ announcements of EV parts plants in Mexico come after Hyundai Motor Co. unveiled a plan in May to invest about $5.5 billion to build its first dedicated electric vehicle and EV battery manufacturing facilities in the US state of Georgia.

Last April, LG Magna e-Powertrain Co. broke ground on a factory in Mexico to produce key auto components, including motors and inverters, for General Motors' next-generation EVs.

LG Magna is a joint venture between Korea’s LG Electronics Co. and Canada’s auto parts maker Magna International Inc.

Write to Jeong-Min Nam at peux@hankyung.com
Yeonhee Kim edited this article